By John Reynolds on Tuesday 7 January 2020
Greensill, Monzo, Zopa, Starling and more.
The UK and European fintech industries continued to be an attractive proposition for investors in 2019, with a string of big-ticket funding rounds and investments.
Here AltFi charts ten startups and challenger banks which raised some of the largest rounds in 2019.
UK fintech Greensill won a mammoth $800m (£607m) investment from Japanese conglomerate SoftBank, as it plotted expansion into key Asian markets.
The London-based firm provides small firms working capital finance to run their day-to-day operations, to cover payments due from large corporations. Greensill plans to use the cash to expand into India and China, as well as ramp up its recent entry into the Brazilian market. The investment valued Greensill at around $3.5bn (£2.7bn).
Metro Bank raised £375m from shareholders to bolster its finances, in a bid to ease fears over its future. The bank said it had exceeded its initial target of £350m, thanks to strong demand from existing and new shareholders.
The move followed a £900m accounting error in January which left the bank without the capital it needed to grow. The bank endured a tough year, with its shares tumbling over 90 percent since it revealed the accounting blunder while its Chairman and founder Vernon Hill and CEO Craig Donaldson stepped away from the business.
Berlin-based fintech N26 also secured a multi-million funding round last year, which it said it would use to spearhead its US launch. The firm extended an initial funding round by $170m (£129m) to an overall funding of $470m (£357m).
Investors included Tencent and Allianz Group’s digital investment unit. The online bank said it will use the additional money to accelerate its push into Europe, the United States and Brazil.
Read more: N26 valued at $3.5bn after new investment
Swedish payments provider Klarna announced an eye-catching $460m (£349m) new round of equity funding, valuing the firm at around $5.5bn (£4.18bn). The buy-now-pay-later platform said it would use the funding to push into the US market. Klarna provides delayed payment services to merchants around the world and claims to have 60 million customers.
The funding was led by San Francisco-based investment group Dragoneer, which has been an early-stage investor in Uber, Airbnb and Spotify. Other key investors in the funding round included HMI Capital, Merian Chrysalis Investment and the Commonwealth Bank of Australia.
Another fintech that snared a big funding round was OakNorth, which raised $440m (£334m), led by Japanese giant SoftBank. The firm, which lends to small-to-medium enterprises through its digital platform, said it had raised $390m(£296m) from SoftBank’s $100bn (£76bn) Vision Fund, with the remaining capital coming from Clermont, the Singapore-based conglomerate. OakNorth said it would use the cash to help launch its lending operations in the US.
Checkout.com, a little-known London fintech company, raised a $230m (£175m) funding round, giving it a valuation of around $2bn (£1.52bn). The funding round was led by Insight Partners and DST Global, with Singapore’s sovereign wealth fund GIC, Blossom Capital, Endeavor Catalyst, and others also contributing.
Checkout.com allows companies to process and accept cross-border payments from a variety of sources including credit and debit cards, online banking, PayPal, Apple Pay and other eWallets. Checkout.com said it would use the funding to expand into Asia and Latin America.
In 2019, Zopa raised its largest funding round to date, courtesy of a £140m injection form IAG Capital, the private investment group, to safeguard its plans to launch a full consumer bank.
Zopa needed to raise £130m or lose its interim banking licence, granted in 2018 by the Bank of England. It had earlier come to light that Zopa needed a cash injection in just three weeks to satisfy regulatory requirements.
Monzo doubled its value to £2bn after closing a fresh round of investor funding last year. The valuation of the London-based bank jumped as it said it had raised £113m from a group of investors led by Y Combinator, a US-based investment firm known for backing holiday letting platform Airbnb, file hosting service Dropbox and online forum Reddit. At its last funding round, Monzo was valued at £1bn.
Starling Bank won a £75m funding round led by Merian Global Investors. The challenger bank said £60m was provided by Merian, formerly known as Old Mutual, which included a £19m injection from Merian's equity investment firm Chrysalis. The round was closed out with £15m from Starling's sole existing investor Harald McPike.
Starling said the raise will fund further growth of the bank's retail and business banking products, along with powering its expansion into Europe. Later in the year Starling raised an additional £30m in funding, aimed at accelerating the bank’s expansion into Europe.
Metro Bank, Starling Bank and ClearBank were also awarded a combined £280m from an RBS fund designed to boost business banking competition. The challenger banks won a grant worth a combined £280m, with Metro taking largest share with £120m, followed by digital-only bank Starling with £100m and ClearBank, which applied for the grant with partner Tide, taking £60m.
RBS's £775m alternative remedies package was set up as one of the conditions attached to its £45bn government bailout at the height of the financial crisis and the cash is being distributed by the Banking Competition Remedies (BCR) body.